Monday, February 26, 2007

The Myth of Anti-Competitivness

Again and again we are told that "we" need to become more competitive and with an ever-changing global economy we can no longer afford the generous days of old when we were all on the dole and there was a free lunch for all. We all know their vision of the past is bunk but even more importantly their line on what is the solution; tightening the belt, lowering wages, more fees for services like parks, privatization, etc... is also bunk. How do we know this? because the countries (mostly northern European) that actually have something actually approaching social equality with high wages, universal health care and education, strong labor laws and a generous welfare state ARE ACTUALLY MORE COMPETITIVE THAN THE US!

Because of this we need to change the debate from where we should be cutting to where we should be spending more. Here's Harold Myerson on the competitiveness debate.

"These domestic policy proposals all have merit; the question is whether they're remotely sufficient to the challenge of a globalized economy. In fact, there are nations with advanced economies that trade even more than we do and have still managed, chiefly through domestic policies, to retain high levels of economic equality and vitality: the nations of northern Europe. Trade constitutes a higher percentage of Scandinavian nations' gross domestic product than it does ours, with little of the downward-leveling and, accordingly, anti-trade backlash that we experience. Their secret is a series of job-training and placement policies, a bigger and better-paying public sector than ours, and the fact that their leading trade partners are other high-wage European nations.

The cost of creating this economic security while remaining globally competitive isn't cheap. In the March issue of The American Prospect, my colleague Robert Kuttner calculates that these nations devote roughly 15 percent more of their GDP to governmental outlays than the United States does. That pencils out to roughly $2 trillion a year that we'd have to shift to the public sector to build an economy in which globalization wouldn't be viewed as so dire a threat. Neither Rubin, a true believer in balanced budgets, nor anybody functioning in the real world of American politics is calling for anything this far-reaching to reshape the U.S. economy."